Music Industry Needs Dose Of Innovation, Not Intervention

My weekly technology law column (Toronto Star version, Ottawa Citizen version, The Tyee version, homepage version) focuses on the contrast between artists such as Radiohead and Nine Inch Nails that are adopting new distribution models, and the recording industry, which continues to lobby for anti-circumvention legislation.  In the weeks leading up to today's Speech from the Throne, CRIA and others lobby groups have urged the government to prioritize intellectual property protection. 

While the data suggests that peer-to-peer file sharing is at best only a minor reason for the decline (more significant is competition from DVD and video game sales and the emergence of big box retailers such as Wal-Mart who have pushed down retail prices and decimated sales of older titles), events over the past month have provided the clearest indication yet that musicians and music sellers are charting a new course that is leaving the major record labels behind.

In the mid-1990s, the industry focused on retaining its core business model by emphasizing two strategies.  First, it relied on copy-control technologies, supported by additional legal measures, to curtail unauthorized copying.  Second, it lobbied for the establishment of a private copying levy on blank media to compensate for the copying that technology could not control.

Ten years later, that strategy is now in tatters.   The use of copy-controls have proven to be an abject failure – not only do they do little to stem the tide of unauthorized copying, but they ultimately punish the industry's best customers who face a barrage of interoperability problems, security threats, and inequitable limitations on their personal property.

Despite generating more than $200 million in revenue for the industry and artists, CRIA also views the private copying levy as a failure.  Last month, it asked the Federal Court of Appeal to allow it to intervene in the legal battle over the application of the levy to Apple iPods.  Rather than supporting the extension of the levy, it surprisingly wants the court to strike it down, thereby reducing revenues to artists. Why the change of heart?  CRIA now admits in court documents that the extension  "broadens the scope of the private copying exception to avoid making illegal file sharers liable for infringement."  In other words, the levy creates a compensation system that legalizes peer-to-peer music downloads.

As the industry dithers with its failed strategy, musicians have begun to take matters into their own hands.  Last year, the Canadian Music Creators Coalition, which includes some of Canada's most acclaimed musicians such as Avril Lavigne, Sarah McLachlan, Feist, Sam Roberts, Billy Talent, Sloan, Sum 41, and Barenaked Ladies, spoke out openly against suing fans and the use of copy-controls.  

A growing number of international stars are following suit.  Last week, Radiohead released its latest CD without copy-controls on its website under a pay-as-you like system (Canada's Issa – formerly known as Jane Siberry – has successfully employed a similar approach for many years). The Radiohead announcement unleashed a stunning series of follow-up developments – reports indicate that Nine Inch Nails, Oasis, Jamiroquai, the Charlatans, and Madonna have either left or are ready to leave their record labels in search of greater commercial success through live performances, merchandise sales, and other online innovation that may include free distribution of their music.

Other artists are exploring new distribution partnerships – the Eagles are selling their latest CD directly to Wal-Mart, Prince distributed millions of copies of his latest CD for free in Britain in a newspaper promotion, former Kinks lead singer Ray Davies plans to do the same, and Nettwerk Records, one of Canada's leading indie labels, combined with a newspaper to offer free downloads of some of its most popular artists.

The rapid pace of innovation highlights the fact that artists and consumers are responding to the new digital reality. As Canada's digital music market continues to grow (last year it outpaced both the U.S. and Europe), Industry Minister Jim Prentice and Canadian Heritage Minister Josée Verner ought to remind lobby groups that it is the lack of innovation – not government intervention – that lies at the heart of their tales of woe.


  1. Andrew Butash says:

    This is fantastic news! I didn’t realize the Radiohead announcement had such a big impact! I’m not a huge Radiohead fan, but I’ll probably pick up their new album just to support this kind of thing. I don’t think record labels will entirely go away, as the smaller independent labels will still help new artists get off the ground, but these established acts leaving their labels is setting a great precedent! I think the big business-style commercial labels are going the way of the dodo. Keep fighting the good fight on this front Mr. Geist. The last thing we need at this point is a Canadian DMCA that harms Canadian consumers and protects foreign record label interests.

  2. Mélanie Millette says:

    Je crois que vous pointez dans ce billet un tournant majeur dans l’attitude de certains membres de l’industrie musicale, à savoir le fait d’utiliser la force des technologies numériques pour gagner en popularité. Par exemple, un artiste pourra compenser la perte des redevances des ventes de disques par une plus grande vente de billets de concert, du fait qu’un plus large public connaît sa musique. C’est la métaphore du judo, utiliser la force de « l’adversaire » pour se propulser.

    [ link ]

  3. Nice to see you and I are aligned in our thinking: [ link ]

  4. Internet is shifting the control of media contents from the big corporations to the web users. No matter if you download legally or not you have a tremendous amount of media out there ready to be consumed. I’m talking about news, articles, photos, books, movies, TV shows and whatever else you can render digitally. With this new paradigm, where everything is at the same level of inconsistency (0 and 1) it becomes unclear what “intellectual property” really is or it should be. To access all this contents you are not really doing anything so transcendental then just moving your finger and click. You just do it without any emotion or effort, or premeditation, or sense of guilt.

  5. POed Canuck
    I just heard them sneak in IP reform in the throne speech….sigh.

    Here’s to hoping that the Party Quebecois votes them off and that the other parties develop themselves enough to either get another minority or boot the AmeriTories out of office. Unfortunately, the Liberals are getting worse and Canada inches ever closer to a 2-party system.

  6. Edward Palonek says:

    Palonek contributes
    Palonek writes, Education has been a tool used by schools to combat so many social issues from dangerous behavior to more upscale crimes. It never sees to amaze me that the number one tool in Music association arsenal is being ignored more so then the tool to lobby government for laws and regulations. Musicians and actors should really take a note from our Educational system which has prevented and helped so many young kids in trouble and/or need.
    Palonek from [ link ] Oct 29th, 2008. Thank you for reading

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